Archive for the ‘Investment’ Category

The global agricultural population—defined as individuals dependent on agriculture, hunting, fishing, and forestry for their livelihood—accounted for over 37 percent of the world’s total population in 2011, the most recent year for which data are available. This is a decrease of 12 percent from 1980, when the world’s agricultural and nonagricultural populations were roughly the same size. Although the agricultural population shrunk as a share of total population between 1980 and 2011, it grew numerically from 2.2 billion to 2.6 billion people during this period.

The world’s agricultural population grew from 2.2 billion to 2.6 billion people between 1980 and 2011. (Photo Credit: UNDP)

Between 1980 and 2011, the nonagricultural population grew by a staggering 94 percent, from 2.2 billion to 4.4 billion people—a rate approximately five times greater than that of agricultural population growth. In both cases growth was driven by the massive increase in the world’s total population, which more than doubled between 1961 and 2011, from 3.1 billion to 7 billion people.

It should be noted that the distinction between these population groups is not the same as the rural-urban divide. Rural populations are not exclusively agricultural, nor are urban populations exclusively nonagricultural. The rural population of Africa in 2011 was 622.8 million, for instance, while the agricultural population was 520.3 million.

Although the agricultural population grew worldwide between 1980 and 2011, growth was restricted to Africa, Asia, and Oceania. During this period, this population group declined in North, Central, and South America, in the Caribbean, and in Europe.

In 2011, Africa and Asia accounted for about 95 percent of the world’s agricultural population. In contrast, the agricultural population in the Americas accounted for a little less than 4 percent. Especially in the United States, this is the result of the development and use of new and innovative technologies as well as the increased use of farm machinery, chemical fertilizers, pesticides, and irrigation systems that require less manual labor.

Continuing a decade-long increase, global food prices rose 2.7 percent in 2012, reaching levels not seen since the 1960s and 1970s but still well below the price spike of 1974. Between 2000 and 2012, the World Bank global food price index increased 104.5 percent, at an average annual rate of 6.5 percent.

The price increases reverse a previous trend when real prices of food commodities declined at an average annual rate of 0.6 percent from 1960 to 1999, approaching historic lows. The sustained price decline can be attributed to farmers’ success in keeping crop yields ahead of rising worldwide food demand. Although the global population grew by 3.8 billion or 122.9 percent between 1961 and 2010, net per capita food production increased by 49 percent over this period. Advances in crop breeding and an expansion of agricultural land drove this rise in production, as farmers cultivated an additional 434 million hectares between 1961 and 2010.

Food price volatility has increased dramatically since 2006. According to the United Nations Food and Agriculture Organization (FAO), the standard deviation—or measurement of variation from the average—for food prices between 1990 and 1999 was 7.7 index points, but it increased to 22.4 index points in the 2000–12 period.

Although food price volatility has increased in the last decade, it is not a new phenomenon. According to World Bank data, the standard deviation for food prices in 1960–99 was 11.9 index points higher than in 2000–12. Some price volatility is inherent in agricultural commodities markets, as they are strongly influenced by weather shocks. But the recent upward trend in food prices and volatility can be traced to additional factors including climate change, policies promoting the use of biofuels, rising energy and fertilizer prices, poor harvests, national export restrictions, rising global food demand, and low food stocks.

Perhaps most significant has been an increase in biofuels production in the last decade. Between 2000 and 2011, global biofuels production increased more than 500 percent, due in part to higher oil prices and the adoption of biofuel mandates in the United States and European Union (EU). According to a 2012 study by the University of Bonn’s Center for Development Research, if biofuel production continues to expand according to current plans, the price of feedstock crops (particularly maize, oilseed crops, and sugar cane) will increase more than 11 percent by 2020.

Some 1.2 billion people—almost a fifth of the world—live in areas of physical water scarcity, while another 1.6 billion face what can be called economic water shortage. The situation is only expected to worsen as population growth, climate change, investment and management shortfalls, and inefficient use of existing resources restrict the amount of water available to people. It is estimated that by 2025, 1.8 billion people will live in countries or regions with absolute water scarcity, with almost half of the world living in conditions of water stress.

Global water scarcity map. (Photo credit: International Water Management Institute)

Water scarcity has several definitions. Physical scarcity occurs when there is not enough water to meet demand; its symptoms include severe environmental degradation, declining groundwater, and unequal water distribution. Economic water scarcity occurs when there is a lack of investment and proper management to meet the demand of people who do not have the financial means to use existing water sources; the symptoms in this case normally include poor infrastructure.Large parts of Africa suffer from economic water scarcity.

The Rights and Resources Initiative (RRI), a coalition of groups working for the rights of rural people to access and use their local natural resources, recently released two reports on the state of large-scale land acquisitions and investments, also known as land grabs.

The reports looked at the financial risk associated with international land investments and gave an overview of the setbacks and progress made in land tenure during 2012.

Investors, often from foreign countries, have turned to land development in recent years because of the high profits that can be made from activities such as mining, industrial food production, logging, and production of rubber or biofuels. But these investments often come with high costs as well, according to a December report from RRI. In addition to the human rights abuses and environmental destruction that can coincide with large-scale land acquisitions, investors can face an increase in their operational costs of as much as 2,800 percent.

The report, “The Financial Risks of Insecure Land Tenure: An Investment View,” profiles five foreign land investments that failed because of a lack of transparency or legality, resulting in financial hardship for the investors. In 2005, the Swedish ethanol producer SEKAB attempted to purchase 400,000 hectares in Zanzibar, Tanzania, to cultivate biofuel crops, but public outcry and the company’s failure to follow policy and environmental protocols led creditors to adandon the project and forced SEKAB to sell its assets at a loss of over $20 million.

In Grand Cape Mount, Liberia, the Malaysia-based multinational Sime Darby, the world’s largest producer of palm oil, had planned to develop 220,000 hectares for oil palm and rubber plantations after signing a 63-year concession with the national government. But land tenure disputes and large-scale rioting have repeatedly disrupted operations, putting the project’s long-term feasibility at risk.

The National Sustainable Agriculture Coalition (NSAC), an organization that advocates for federal agricultural policy reform, published an article on January 3 explaining the implications of the Farm Bill extension for agriculture, food, and rural development programs in the United States over the next nine months. The Farm Bill is passed every five years and determines national policy and funding for all agriculture, nutrition, conservation, and forestry programs.

The U.S. Congress recently passed a temporary “Farm Bill” to determine funding for agricultural programs throughout the country. (Photo credit: Dickinson Organic Farm)

The temporary bill, passed as part of the year-end “fiscal cliff” negotiations, cut many programs established to promote sustainable agriculture, including programs for minority and beginning farmers, farmers markets, organic agricultural research, rural development, and renewable energy. The bill also retained direct subsidies for producers of commodities like corn and soybeans—regardless of producer income or commodity price—which currently cost the U.S. Department of Agriculture $5 billion each year.

To read NSAC’s full analysis of the Farm Bill extension and its predictions for the permanent version of the bill, click here. And to hear NSAC Policy Director Ferd Hoefner speak more about the Farm Bill negotiations on National Public Radio, click here.

The speakers noted that land grabbing, or the acquisition of large plots of land by foreign actors such as national governments or large corporations, has become particularly notable since 2007. A growing number of countries, fearful of unrest caused by volatile food prices or driven by the need for more energy security through biofuels, have begun investing in farmland abroad, cultivating the land and then exporting the products back home.

The countries purchasing the land typically have insufficient farmland at home (or they have exhausted it) but have ample capital to invest abroad. Among the biggest investors are China, India, Japan, South Korea, Egypt, and Saudi Arabia, which have been buying up substantial parcels in regions like sub-Saharan Africa, Southeast Asia, and Latin America. The International Land Coalition estimates that more than 200 million hectares of foreign agricultural land (nearly the area of Western Europe) were approved or under negotiation between 2000 and 2010.

In The Global Farms Race, the authors note that these land transactions occur most frequently in less-developed countries where governments lack transparency or accountability. These countries attract investors with financial incentives such as low taxes or inexpensive labor, but provide little support for local populations that are displaced or otherwise negatively affected by the land sales. As such, land grabs often become a “race to the bottom” among agriculturally fertile countries to attract wealthy investors, said author and panelist Kugelman.

Kugelman adds, however, that the pace of land grabbing has slowed in recent years. And although the driving factors behind land grabs—food and energy insecurity—are likely to persist, he suggests possible actions to avoid the potential downsides of these investments. Effective government oversight and regulation could help sellers avoid compromising their food security too much. Meanwhile, investing in drought-resistant farming techniques and crops could alleviate some of the demand created by nations too arid to farm their own land.

What is your opinion on land grabbing? Is it inherently bad or can the practice be modified to benefit all affected parties? Watch the webcast discussion here and let us know your thoughts in the comments section!

Andrew Alesbury is a research intern with the Nourishing the Planet project.

Only 6 percent of farmers in the European Union are under the age of 35, while one-third of the region’s farmers are over the age of 65, according to the European Council of Young Farmers (CEJA). The lack of generational renewal in European agriculture puts future food production and the vitality of rural areas at risk, the council argues.

“Future Food Farmers” aims to address the age crisis in European agriculture. (Photo credit: www.futurefoodfarmers.eu)

To raise public and political awareness about the age crisis in European agriculture, CEJA recently launched a Europe-wide campaign called “Future Food Farmers.” The primary objective is to make young farmers a priority in the upcoming reform of the Common Agricultural Policy, the EU’s leading agricultural policy framework. CEJA hopes to shape European legislation and regulation to make agriculture more accessible to young people.

Specifically, CEJA advocates that Measure 112 in the current CAP, which provides for the “setting up of young farmers,” be made mandatory. Under the measure, EU member states can provide aid to their young farmers in the form of land, credit, or low-interest loans. But because this action is voluntary, some countries ignore it, leading to a lack of cohesive implementation and, CEJA argues, resulting in a lost opportunity to support Europe’s next generation of farmers. According to an October 2012 progress report from the European Network for Rural Development, just under half of the €4.9 billion (US$6.4 billion) budgeted for Measure 112 from 2007 to 2013 has been spent, and some 70,000 farmers have received support—only 42 percent of the set target.

In early 2013, CEJA plans to present its petition and signatories to European Commissioner for Agriculture and Rural Development, Dacian Ciolos; President of the Agriculture and Fisheries Council and Irish Farm Minister, Simon Coveney; and Member of European Parliament and Chairman of the Committee on Agriculture and Rural Development, Paolo de Castro.

According to the Consultative Group on International Agricultural Research (CGIAR), the world’s largest publicly funded global agricultural research partnership, “feeding a global population of 9 billion people by 2050 will require at least a 70 percent increase in global food production and a 50 percent rise in investments in the agricultural sector.” At the Fourth Agriculture and Rural Development Day gathering, CGIAR unveiled a new global research portfolio worth US$5 billion over five years. The announcement was made two days prior to the commencement of the United Nations Conference on Sustainable Development, or Rio+20, where food security and sustainable agriculture were identified as international priorities. According to the UN, “a profound change of the global food and agriculture system is needed if we are to nourish today’s 925 million hungry and the additional 2 billion people expected by 2050.”

CGIAR research aims to increase the productivity of small farmers in developing countries (Photo Credit: CGIAR)

This past summer the partnership officially launched 15 new programs, which include research intended to mitigate climate change, enhance agricultural productivity and boost food security; intended to promote the conservation and restoration of water, land, forests, and ecosystems; and, more specifically, to augment the cultivation of rice.

CGIAR’s ambitious portfolio aims to “deliver the scientific, policy, and technological advances needed to tackle the major global development challenges of the century for the benefit of the poor and the planet.” A top priority of the new research agenda is to increase the productivity of small farmers—who, according to CGIAR, provide up to 80 percent of the food supply in developing countries—without damaging the environment.

CGIAR researches ways to reduce rural poverty, increase food security, improve health and nutrition, and ensure the sustainable management of natural resources. The CGIAR Consortium is composed of fifteen member centers, which are responsible for conducting research on behalf of the partnership. For the past 40 years, CGIAR’s research has promoted the conservation, revitalization and sustainable management of natural resources, and has simultaneously boosted yields on farms around the world.

Frank Rijsberman, the new CEO of the CGIAR Consortium, claims that, “science and the environment need to be best friends if we are to achieve a food secure future.” He notes, “investing in agricultural research is a critical first step to kick-start the innovation engine for a sustainable, food secure future.”

Sophie Wenzlau is a research associate with the Nourishing the Planet project.

To purchase State of the World 2011: Innovations that Nourish the Planet please click HERE.

In our new Saturday Series, we interview inspiring people our readers have nominated. These people are working on the frontlines to improve the global food and agricultural systems. Want to nominate someone? E-mail your suggestions to Danielle Nierenberg!

Dr. José Daboub of GAIN (Photo Credit: GAIN)

Name: Dr. Juan José Daboub

Affiliation:The Global Adaptation Institute (GAIN). GAIN is a non-profit made up of global leaders and climate scientists focused on the urgent need for adaptation in a changing world. By measuring what is at risk and supporting projects that are working towards adaptation, GAIN hopes to save lives and livelihoods around the globe.

Bio: Dr. Juan José Daboub is the Founding CEO of GAIN, as well as Chair of the World Economic Forum’s Global Agenda Council on Climate Change. Dr. Daboub’s career began in El Salvador, where he became a respected business leader and from 1999 to 2004 he served as both the country’s Minister of Finance and the Chief of Staff to President Francisco Flores. In 2004 he joined Flores in starting the America Libre Institute, a non-profit that implemented projects in Latin America promoting liberty, stability, and growth. From 2006 until the creation of GAIN in 2010, Dr. Daboub was the Managing Director of the World Bank, where he oversaw operations in 110 countries around the world. Dr. Daboub brings his global experience to GAIN, and shares with us his thoughts on the Institute’s work.

How did the Global Adaptation Institute begin and what led to the creation of the GAIN Index?

The Global Adaptation Institute was created in 2010 in order to fill a gap in helping countries, especially those in the developing world, to be more resilient and have a better capacity to adapt to an ever-changing world. We brought together a group of world leaders in both the private and public sectors to encourage organizations, especially private ones, to be more conscious of the urgent need to adapt.

With that in mind, the Institute focuses on three areas that we believe are very effective at helping to save lives and livelihoods:

We need to be able to measure what matters. We need a proper matrix to know whether policies and investments are helping to build resilience. Creating this matrix, called the GAIN Index, is a focus of the Institute. We believe the GAIN Index is the most modern and advanced tool out there for measuring a country’s readiness and vulnerabilities in order to improve their conditions.

Identify what’s going on in the real world and highlight practical solutions that investors can focus on.

Build strategic alliances with organizations such as universities and think tanks that are interested in the subject of adaptation.

What kind of response have you received to the GAIN Index? Have you had much success in convincing governments and private businesses to adopt climate adaptation measures?

Many companies, such as ABM, Caterpillar, Cargill, Pepsi-Cola, and Coca-Cola, are beginning to consider adaptation risks in certain countries and in certain parts of their production lines when making investments and building resilience in their supply chain. Any company that deals with food production, insurance, water, infrastructure, or energy in the international sphere must consider these factors, and many are beginning to do so.

Women farmers produce more than half of all food worldwide and currently account for 43 percent of the global agricultural labor force, yet few extension or research services are directed at women farmers, according to new research conducted for our Vital Signs Online service. Women produce as much as 50 percent of the agricultural output in South Asia and 80 percent in sub-Saharan Africa.

Women produce as much as half of the world’s agricultural output. (Photo credit: Bernard Pollack)

In spite of women farmers’ essential roles in global and local food security, there is a persistent gender gap in agriculture. Cultural norms and restrictive property or inheritance rights limit the types and amount of financial resources, land, or technology available to women. Studies in South Asia and throughout the Middle East also show that women receive lower wages and are more likely to work part-time or seasonally than men in comparable jobs, regardless of similar levels of education and experience.

Recognizing the factors restricting women from receiving full compensation for their role in global agriculture is key to alleviating the gender gap in agricultural employment, resources, and development. Women produce 60–80 percent of the food in developing countries but own less than 2 percent of the land. They typically farm non-commercial, staple crops, such as rice, wheat, and maize, which account for 90 percent of the food consumed by the rural poor.

Fewer extension or research services are directed at women farmers because of perceptions of the limited commercial viability of their labor or products—and only 15 percent of extension officers around the world are women. Yet the Economist Intelligence Unit’s newly developed Global Food Security Index has a 0.93 correlation with its index of Women’s Economic Opportunity, showing that countries with more gender-sensitive business environments—based on labor policies, access to finance, and comparative levels of education and training—have more abundant, nutritious, and affordable food. This relationship provides evidence that when women have equal resources and opportunity, they can produce higher—and higher-quality—agricultural yields.